Village keen to declare Singapore park talks

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Village's Australian theme parks include Warner Bros Movie World on the Gold Coast.Picture:Andy Zakeli

Entertainment group Village Roadshow is considering investing up to $40 million in a Singapore theme park in a joint venture with the Singapore Government.

The company said yesterday it had held only preliminary discussions with the Singaporeans but felt compelled to tell shareholders about the idea so that it would not be accused of withholding information from the market.

Earlier this month, Village was forced to suspend an ordinary share buyback following a complaint by tiny German shareholder Boswell Filmgesellschaft to the Takeovers Panel.

Boswell, which owns only 2000 shares in Village, complained to the panel about Village spending over $200 million buying back more than half of its preference shares and up to 10 per cent of its ordinary shares on the grounds that the buybacks could "materially prejudice the company's ability to pay its creditors".

That attack followed its court action last year derailing plans by Village to simplify its capital structure with a scheme of arrangement to buy back all its preference shares.

Village finance director Peter Foo said yesterday the company was careful to keep the market well informed of its intentions.

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"The point is, and I will make this point very carefully, this is something that we have had preliminary discussions about ... there is no (memorandum of understanding), there is nothing; the issue is we don't want to have any unknown, potential conversations that we don't tell the market about at this point in time," said Mr Foo.

"We don't want to give any further ammunition to Boswell ... they can make whatever they like of it," he said.

Village's interest in a new theme park comes at a time when it has angered investors by diverting dividend payments on ordinary and preference shares to fund the production of movies such as The Matrix.

Mr Foo said any investment in Singapore would be small compared with its overall business interests, and would be funded by an off-balance-sheet theme-park facility.

"I can't speak on behalf of our partners (AOL Time Warner), but if they did come in, which is a strong likelihood ... you are talking about our contribution to this over a three-year period being $25 million or $20 million and then you take out the fact we would probably earn $3 million or $4 million in fees during construction," said Mr Foo.

"The banks wouldn't lend us money to pay dividends. They would lend us money to invest in a new asset."

Village's potential participation would be in the design and management of construction of the theme park on Singapore's Sentosa Island as well as an equity interest of either 25 per cent or 50 per cent in, and management of, the business.

Village is Australia's largest theme park operator, with three parks on the Gold Coast.